ARM Companies with Immigrant Collections Expertise May Get Boost from Reform

As the debate continues over whether immigrants will be covered by health care reform, some accounts receivable management firms serving health care providers with high immigrant patient populations may have an opportunity to expand their services.

According to the Center for Immigration, more than 12 million immigrants are uninsured, accounting for 27 percent of the U.S. uninsured population. Sixty-four percent of illegal immigrants don’t have health insurance, leaving many of their U.S. born children uninsured.

None of the health care reform bills introduced in the U.S. House or the Senate include insurance coverage subsidies for illegal immigrants. However, to help pay for expanded coverage for uninsured Americans, some propose cutting funds currently used to help pay hospitals for treating illegal immigrants by as much as 40 percent after insurance expansion is in place.

If that happens, some health care policy experts say more illegal immigrants could find themselves paying for medical care with cash – possibly at one of the growing number of retail health care clinics (“Walgreen Looks to Make a Larger Footprint on Basic Health Care Delivery,” April 3.) But some industry experts expect many illegal immigrants will continue to postpone treatment until they have little choice but to visit an emergency room, where they cannot be turned away.

Fitch Ratings Health Facilities Analyst Lauren Coste said she expects bad debt expense associated with illegal immigrants to remain the same. But uncompensated care expense could increase as hospitals move uninsured patients to charity care status or offer larger discounts – a trend that gained momentum in the second quarter of 2009.

“As bad debt has become more of an issue, hospitals have gotten smarter about how they go after accounts,” Coste said.

The average bad debt balance accumulated by illegal immigrants could surpass the average balance for newly insured American patients, especially if reform limits out of pocket expenses for insured patients to 12 percent of their annual income ("ARM Industry Weighs Impact of Health Care Reform on Business," Aug. 21).

New Internal Revenue Service reporting rules for charity care could impact hospitals’ ability to apply charity care funding towards some illegal immigrants, which may lead some hospitals to charge off some accounts. However, hospitals where immigrants account for the majority of the patient base may be forced to pursue collections if government funding to treatment illegal immigrants is cut, said Kaulkin Ginsberg Analyst Michael Klozotsky.

That could lead to service expansion opportunities for agencies that currently serve health care providers with a large immigrant patient base, he said.

“If the agency is already servicing a population of immigrants, documented or undocumented, and has a relationship or business presence in the community, it allows for some creative ways to reach out (to the immigrant population),” said Klozotsky.

Still, Klozotsky envisions very few agencies may be positioned to pursue the opportunity, and noted that many won’t want to invest resources in the market given the difficulty in identifying and collecting from debtors who often are paid in cash or don’t own property.